Egypt’s GDP growth will see 4.5 % slowdown until 2024: Fitch

Egypt is expected to witness a real GDP growth slowdown through 2024 to reach approximately 4.5 percent, down from five percent in 2015-2019, due to coronavirus, said Cedric Chehab, global head of country risk at Fitch Solutions.

Chehab said that Egypt is among the emerging markets whose fiscal deficits are expected to remain wide with about 10 percent of Egypt’s GDP until 2024, and to be the top country among emerging markets to suffer such deficits.

Chehab said emerging markets’ output will see a contraction by 1.5 percent in 2020, driven by lockdowns and declines in investment, consumption and trade.

He said emerging markets have turned their focus, amid the crisis, on monetary policies, which are much smaller programmed than in developed markets, with a focus on smoothing market variations, rather than large-scale asset purchases.

“While markets have not yet responded negatively, we see significant longer-term risks. Given weaker monetary institutions, and in some cases independence, excessive use of QE could lead to rising inflation in EMs and significant currency weakness,” Chehab illustrated.

Brazil, India, Turkey, Thailand, Mexico and Russia, the bigger emerging markets, are facing the sharp contraction, as their manufacturing purchasing managers’ index (PMI) sinks deep, according to Chehab.

Amid the concerns of a second wave of the pandemic, Chehab explained that emerging markets now make up the majority of new cases, and there is a risk that the disease will become an endemic in poorer emerging markets where the authorities are not able to contain it.

source: Ahram online